EXHIBIT 99
APPLIED INDUSTRIAL TECHNOLOGIES REPORTS
RECORD SALES AND EARNINGS IN ITS THIRD QUARTER,
RAISES GUIDANCE FOR FOURTH QUARTER
CLEVELAND, OH (April 21, 2005) - Applied Industrial Technologies (NYSE: AIT)
today reported that sales and operating income for its fiscal 2005 third
quarter, which ended March 31, 2005, were the highest ever recorded by the
company in any quarter.
Net sales for the quarter were $446,470,000, up 14.2% compared with $391,053,000
in the same period a year ago. Net income for the quarter increased 54% to
$16,336,000 from $10,611,000 last year. Earnings per share increased by 47% to
$0.53 from $0.36 per share in the third quarter of 2004, marking the tenth
consecutive quarter in which the company's earnings per share were at least 25%
higher than the prior-year period.
(Note: all per-share amounts have been adjusted to reflect the 3-for-2 stock
split paid December 17, 2004.)
Third quarter 2005 earnings include an unforecasted gain of approximately $2.7
million or $0.09 per share, from proceeds on a life insurance policy and from
the sale of stock received as a distribution from a customer's bankruptcy
reorganization. Earnings for the same quarter last year included one-time gains
of approximately $1.6 million, or $0.05 per share, from a tax settlement.
For the nine months ended March 31, 2005, sales increased 13.7% to
$1,263,735,000 from $1,111,910,000 in the same period last year. Net income for
the period increased 91% to $39,356,000, or $1.29 per share, versus $20,576,000,
or $0.70 per share, last year.
Commenting on results, Applied Chairman & Chief Executive Officer David L. Pugh
said, "While the marketplace remains very competitive, our third quarter
performance showed marked improvement fueled by a strong industrial economy.
Every facet of our business performed well. Increased sales volume and ongoing
improvements in our operating efficiencies enabled us to post a strong earnings
increase -- even before the non-operating gain of $0.09 per share. We also
achieved a return on assets of 13.4% through our first nine months as compared
to 7.1% in the same period last year.
"Significantly, we generated a third quarter operating margin of 5.4%, up from
3.8% in the same quarter a year ago. Through nine months, we have achieved an
operating margin of 5%, a major milestone that we have worked hard to attain,
even while our gross margin was lower than last year. We are sharing our
improved financial performance with our shareholders and have raised our
dividends 50% in the last year.
"Consistent with the productivity Applied has shown and with an anticipated
continuation of a strong market, we are increasing sales and earnings guidance
for our fiscal fourth quarter. Currently, we expect sales in the range of $450
million to $460 million, resulting in full-year sales of between $1.71 billion
and $1.72 billion. Fourth quarter earnings per share are expected in the range
of $0.45 to $0.50, resulting in full-year earnings of $1.74 to $1.79 per share."
In the nine months ended March 31, 2005, the company repurchased 414,000 shares
of stock for $8.9 million. At March 31, board authorization was in place to
repurchase up to 1,001,000 additional shares.
Applied will host its third quarter conference call at 4 p.m. today (Thursday,
April 21). To join in the call, dial 1-800-311-0799 and passcode 6104983. The
call will be conducted by Chairman and CEO David L. Pugh, President and COO Bill
L. Purser, and CFO Mark O. Eisele. The call will also be Web cast and can be
accessed live online at http://www.applied.com and will be archived there for 14
days. A replay of the teleconference will be available at 1-888-203-1112
(passcode 6104983) from 7 p.m. on April 21 through 12 midnight on May 5.
With more than 430 facilities and 4,300 employee-associates across North
America, Applied Industrial Technologies is an industrial distributor that
offers more than 2 million parts critical to the operations of MRO and OEM
customers in virtually every industry. In addition, Applied provides
engineering, design and systems integration for industrial and fluid power
applications, as well as customized mechanical, fabricated rubber and fluid
power shop services. For its fiscal year ended June 30, 2004, Applied posted
sales of $1.52 billion. Applied can be visited on the Internet at
http://www.applied.com .
This press release contains statements that are forward-looking, as that term is
defined by the Securities and Exchange Commission in its rules, regulations and
releases. Forward-looking statements are often identified by qualifiers such as
"expect," "guidance" and similar expressions. Applied intends that such
forward-looking statements be subject to the safe harbors created thereby. All
forward-looking statements are based on current expectations regarding important
risk factors including trends in the industrial sector of the economy, and other
risk factors identified in Applied's most recent periodic report and other
filings made with the Securities and Exchange Commission. Accordingly, actual
results may differ materially from those expressed in the forward-looking
statements, and the making of such statements should not be regarded as a
representation by Applied or any other person that the results expressed therein
will be achieved. Applied assumes no obligation to update publicly or revise any
forward-looking statements, whether due to new information, or events,
otherwise.
######
(A financial summary is attached.)
For more information, contact Mark O. Eisele, Vice President - Chief Financial
Officer & Treasurer, at 216/426-4417. Press contacts phone Richard C. Shaw, Vice
President - Communications, at 216/426-4343.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
-------------------------------------------
(Unaudited) (Thousands, except per share data)
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31 March 31
----------------------- ----------------------------
2005 2004 2005 2004
NET SALES $ 446,470 $ 391,053 $ 1,263,735 $ 1,111,910
Cost of sales 327,177 286,630 930,972 818,844
--------- --------- ----------- -----------
GROSS PROFIT 119,293 104,423 332,763 293,066
Selling, distribution and administrative 95,213 89,543 269,957 259,940
--------- --------- ----------- -----------
OPERATING INCOME 24,080 14,880 62,806 33,126
Interest expense, net 1,214 1,397 3,848 4,120
Other (income) expense, net (2,640) (458) (2,798) (400)
--------- --------- ----------- -----------
INCOME BEFORE INCOME TAXES 25,506 13,941 61,756 29,406
INCOME TAXES 9,170 3,330 22,400 8,830
--------- --------- ----------- -----------
NET INCOME $ 16,336 $ 10,611 $ 39,356 $ 20,576
--------- --------- ----------- -----------
NET INCOME PER SHARE - BASIC $ 0.55 $ 0.37 $ 1.33 $ 0.72
========= ========= =========== ===========
NET INCOME PER SHARE - DILUTED $ 0.53 $ 0.36 $ 1.29 $ 0.70
========= ========= =========== ===========
AVERAGE SHARES OUTSTANDING - BASIC 29,857 28,944 29,556 28,765
========= ========= =========== ===========
AVERAGE SHARES OUTSTANDING - DILUTED 30,874 29,483 30,619 29,356
========= ========= =========== ===========
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Cost of sales for interim financial statements is computed using estimated
gross profit percentages which are adjusted throughout the year based upon
available information. Adjustments to actual cost are primarily made based on
periodic physical inventories and the effect of year-end inventory quantities on
LIFO costs.
(2) Other (income) expense, net for the quarter ended March 31, 2005 includes a
non-recurring gain of $2,500 related to the proceeds from a life insurance
policy and a gain of $200 on the sale of stock received from a customer
bankruptcy reorganization process.
(3) All share and per share data have been restated to reflect a 3 for 2 stock
split effective December 17, 2004.
(4) During the quarter ended March 31, 2004, the Company recorded non-recurring
tax benefits primarily from the settlement with the Internal Revenue Service
related to audits of our 1997 and 1998 tax returns and the acceptance by the IRS
of tax refund claims for 1999, 2000, and 2001. The settlement added $1,600, or
$0.05 per share, to earnings.
(5) Certain reclassifications have been made to prior year amounts to be
consistent with presentation in the current year.
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Amounts in Thousands)
March 31, 2005 June 30, 2004
(Unaudited)
-------------- -------------
ASSETS
Cash $ 83,374 $ 69,667
Accounts receivable, net of allowances of $6,550 and $6,400 214,867 190,815
Inventories 186,007 159,594
Other current assets 29,933 22,957
--------- ---------
Total current assets 514,181 443,033
Property - net 72,240 77,025
Goodwill 51,044 49,852
Other assets 26,508 26,931
--------- ---------
TOTAL ASSETS $ 663,973 $ 596,841
========= =========
LIABILITIES
Accounts payable $ 97,314 $ 78,767
Other current liabilities 75,158 72,562
--------- ---------
Total current liabilities 172,472 151,329
Long-term debt 77,174 77,767
Other liabilities 32,210 28,210
--------- ---------
TOTAL LIABILITIES 281,856 257,306
--------- ---------
SHAREHOLDERS' EQUITY 382,117 339,535
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 663,973 $ 596,841
========= =========
APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
-----------------------------------------------
(Unaudited) (Amounts in Thousands)
Nine Months Ended March 31
----------------------------
2005 2004
------------- ------------
CASH PROVIDED FROM OPERATIONS:
Net income $ 39,356 $ 20,576
Items not requiring cash:
Depreciation and amortization 13,101 12,776
Other 6,930 4,109
Gain on sale of property (1,121) (101)
Cash effect of changes in working capital (25,446) (28,184)
------------- ------------
CASH PROVIDED FROM OPERATIONS 32,820 9,176
------------- ------------
INVESTING ACTIVITIES:
Property purchases (6,283) (11,909)
Proceeds from property sales 3,206 1,077
Acquisition of businesses, less cash acquired (5,635) (1,285)
Deposits and other (1,093) (1,185)
------------- ------------
CASH USED IN INVESTING ACTIVITIES (9,805) (13,302)
------------- ------------
FINANCING ACTIVITIES:
Borrowings and repayment of notes payable - net (2,850)
Change in cash overdrafts (1,780) (6,757)
Purchase of common stock for treasury (8,884) (6,258)
Cash dividends paid (9,133) (6,945)
Exercise of stock options 9,961 5,135
------------- ------------
CASH USED BY FINANCING ACTIVITIES (9,836) (17,675)
------------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 528 108
------------- ------------
INCREASE (DECREASE) IN CASH $ 13,707 $ (21,693)
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